Key U.S. Data Releases and Events

Among the key releases for the upcoming week will be April's Personal Income and Outlays update, which will show minuscule gains in income and consumer spending. The durable goods report will show orders taking it on the chin again in April, falling 4.0%, with a one-two punch from aircraft and motor vehicles. The GDP revisions will show that the economy grew a bit faster than initially estimated and that the inventory overhang was smaller.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, May 27 – New Home Sales (Apr.)

Global Insight: 0.515 Mil.
Consensus: 0.527 Mil.
Last Actual: 0.526 Mil. (Mar.)

What to Look For

• Another drop in sales.
• But declining inventories as well.
• Annual revisions may result in a downward revision to sales and an upward revision to inventories.

Implications

Credit remains tight, the economy is losing jobs, and house prices are falling in more places and at faster rate than six months ago. All of this adds up to a dismal house-selling season.

Wednesday, May 28 – Durable Goods Orders (Apr.)

Global Insight: -4.0%
Consensus: -1.1%
Last Actual: -0.3% (Mar.)

What to Look For

• Orders for durable goods probably took it on the chin again in April, falling 4.0%, with a one-two punch from aircraft and motor vehicles.
• Aircraft orders were probably a big drag, since Boeing had its leanest month for orders in almost a year and a half.
• Core capital goods orders have had three consecutive bad months, losing almost 3% since December. We project that they will suffer another decline in April.

Implications

The motor vehicle sector is struggling on all fronts, with light-vehicle sales at their lowest in more than a decade. With the economy weak, businesses in other sectors are holding off on buying new plant and equipment. Real business spending on equipment and software will probably drop in the second and third quarters.

Thursday, May 29 – Real Gross Domestic Product, Preliminary (Q1)

Global Insight: 0.9%
Consensus: 0.9%
Last Actual: 0.6% (Advance, Q1)

What to Look For

• GDP growth will be revised up to 0.9% from 0.6%.
• Nonresidential construction and net exports are both likely to be revised up sharply.
• Exports and imports will both be revised down, but the import drop will be much larger.

The revision will say that the United States was passing more of its domestic demand weakness on to the rest of the world than first thought. Inventory accumulation will be revised down, which will be greeted as a positive development since it will suggest less of an inventory overhang going into the second quarter, and hence less need for big production cutbacks.

Friday, May 30– Personal Income, Consumption, and Prices (Apr.)

Personal Consumption, Nominal
Global Insight: 0.2%
Consensus: 0.2%
Last Actual: 0.4% (Mar.)

Personal Consumption, Real
Global Insight: 0.1%
Last Actual: 0.1% (Mar.)

Core PCE Price Index
Global Insight: 0.1%
Consensus: 0.1%
Last Actual: 0.2% (Mar.)

Personal Income
Global Insight: 0.1%
Consensus: 0.2%
Last Actual: 0.3% (Mar.)

What to Look For

• Stimulus payments made in late April will boost transfers by over $20 billion (annualized).
• Excluding transfer payments, income will decline.
• Rental income and farm proprietor's income have dropped for three straight months. Expect both to decline again in April.
• Private wage and salary disbursements will drop for the first time in a year.
• Still, personal income will manage to eke out a small nominal gain.

Implications

Meager real income gains spell trouble ahead. The stimulus payments will boost spending in the third quarter. These positive effects wear off by the fourth quarter, however.

The consumer is struggling. Gas prices are at record highs. The weak dollar is making foreign goods more expensive. Food prices are soaring. Homes can no longer be used as ATM machines. Real spending on durables and nondurables may drop for the second straight time in the second quarter.